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  • Wasteful Spending Programs at the Department of Energy

    DOE Secretary Ernest J. Moniz (Rick Friedman/Polaris/Newscom)

    DOE Secretary Ernest J. Moniz (Rick Friedman/Polaris/Newscom)

    With the next budget battle looming, there will be attempts to undo sequestration, and proponents of a bloated budget will argue that very little if anything should be cut from the budget. But there are several programs within the Department of Energy (DOE) that can be cut or eliminated entirely.

    Take the DOE’s Office of Energy Efficiency and Renewable Energy (EERE), for example. The spending in EERE has the goal of lowering the costs of technologies to compete in the marketplace for “green” technologies. In March 2013 the DOE announced five new spending projects as part of its Clean Energy Manufacturing Program that “focused on reducing energy use and costs for U.S. manufacturers, while helping to boost product output and improve companies’ bottom lines.”

    The DOE has granted millions of dollars to huge chemical and auto companies, and in the latest round of spending, the DOE awarded a $2.5 million grant to TIAX LLC to work with Green Mountain Coffee to reduce the energy used in roasting coffee beans.

    Innovation. Lower costs. Reduced energy use. Increased competitiveness and more profit. Less energy-intensive coffee beans. What’s not to like about that?

    What’s not to like is the American taxpayer paying for these initiatives that should be fully funded by the private sector. Companies will invest in innovation to improve processes, reduce energy, and improve their bottom lines, but when the taxpayer pays for part of that “investment,” the government program is offsetting private investments that would have been made anyway.

    These public-private partnerships can also skew risk in a direction that could misallocate the private investment that the company would make without the government handout. Perhaps the company believes the best use of its resources is to expand and open a new office instead of investing in a new energy-efficient technology. These are decisions that companies can and do make all the time on their own, but when politicians provide carrots with taxpayer money to direct private investments to where the government wants, it distorts market signals in a way that is harmful to innovation and economic growth.

    The DOE’s wasteful spending is not confined to renewable energy and energy efficiency. The Office of Fossil Energy and Nuclear Energy is attempting to commercialize and lower costs for politically preferred technologies.

    Congress should end these spending programs and allow investors, energy companies, and consumers to make their own decisions in the market to drive promising energy technologies forward.

    Posted in Capitol Hill, Energy [slideshow_deploy]

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